for people who care about the West

Oil drillers get 'one-stop shopping' at no extra cost

Western lawmakers exempt energy industry from extra fees

The Bureau of Land Management will be getting more resources to handle its booming workload, but not from the industry that’s most responsible for the boom.

In June, the Government Accountability Office (GAO), Congress’ investigative arm, reported that the understaffed BLM was failing to meet its environmental protection responsibilities. Over the past six years, oil and gas companies have nearly quadrupled the number of drilling permit applications they’ve submitted to the BLM. The agency, whose budget has increased by only 64 percent during that time, just can’t keep up with the applications, to say nothing of monitoring existing projects (HCN, 8/8/05: Industry embeds its own in the BLM).

To remedy the problem, the GAO recommended that the BLM charge energy companies for drilling permit applications, so that it can offset the rising costs of permit processing and hire more employees. The BLM then announced plans to raise an estimated $20 million each year by charging oil and gas companies $4,000 per permit application.

In August, however, during the last hours of negotiations on the national energy bill, Sens. Craig Thomas, R-Wyo., and Orrin Hatch, R-Utah, inserted a provision that speeds up the oil and gas permitting process and adds more staff to the BLM’s most overwhelmed field offices — without charging oil and gas companies any new fees.

The bill creates Federal Permit Streamlining Pilot Projects — also called "one-stop shopping" programs — in seven of the West’s busiest BLM field offices. Those offices, which process 70 percent of the drilling permit applications nationwide, will gain 130 additional employees. They will house not just BLM officials, but representatives from each federal agency involved in permit approval, including the U.S. Fish and Wildlife Service, the U.S. Forest Service, and the Bureau of Indian Affairs.

The intent is to improve communication and reduce redundant efforts among agencies, according to Cameron Hardy, Sen. Thomas’ press secretary.

Better coordination between agencies is a good idea, says The Wilderness Society’s Peter Aengst. But Aengst and others outside the oil and gas industry criticize the program’s funding mechanism. The pilot projects will be paid for with the fees the federal government already collects from companies and individuals who have leased mineral rights. Those fees, which nationwide will amount to about $36 million this year, are usually split evenly between the state in which they’re collected and the federal treasury — the pot that Congress draws upon for general appropriations. Now, the half that normally goes to the treasury will be diverted to fund the pilot programs.

"In these fiscally constrained times, money should not be taken out of the general treasury for something that’s going to benefit the oil industry," says Beth Daley, spokeswoman for the nonprofit Project on Government Oversight. "It doesn’t pass the sniff test."

Hardrock mining companies, which will have to pay new permitting fees under the new energy bill, are also unhappy. "(The government is) looking under every bed for every nickel and dime, so I don’t understand why they’re not requiring fees for oil and gas," says Luke Popovich, spokesman for the National Mining Association.

Oil and gas industry representatives say that any new fees would overburden them, because companies already assume hidden costs that the government should be paying. Andrew Bremner of the Independent Petroleum Association of Mountain States says that companies don’t want to wait years for the BLM to do the environmental studies required under the National Environmental Policy Act, so they pay for the studies themselves — and those studies can add up to over a million dollars per multi-well project.

But the proposed $4,000 permit fee would have represented a fraction of what companies can expect to earn on each project. One permit can cover the development of hundreds of wells; companies operating in Wyoming last year earned an average of $187,782 per active well.

Fast-track programs in Carlsbad and Farmington, N.M., opened their doors in October. The other BLM offices in the project — in Grand Junction, Colo., Buffalo and Rawlins, Wyo., Miles City, Mont., and Vernal, Utah — will be hiring employees to staff their pilot programs over the next few months.